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AUDUSD Market Update

8/26/2022 2:35 PM

The AUD/USD pair is correcting around 0.6960 against the background of market participants' expectations of the continuation of the "hawkish" policy of the US Fed.

Today at 16:00 (GMT+2), the head of the department Jerome Powell will speak at the symposium in Jackson Hole. It is expected that the official will announce plans to continue the current tightening of monetary parameters and, in particular, to raise the interest rate in September by another 75 basis points, which, in turn, will provide the US currency with moderate short-term support. Despite the fact that in July, inflation in the USA slightly decreased to 8.5% from 9.1%, its impact on the national economy remains significant.

Meanwhile, the head of the Federal Reserve Bank of St. Louis, James Bullard, acknowledged that the adjustments made to the indicator cannot yet fully affect the rapid growth in consumer prices, which is likely to remain high for a longer period of time than previously thought. Against this background, the official called for an interest rate increase of at least 75 basis points, as was done in July and June. If the US Fed continues its tightening policy and changes the value by 0.50%-0.75%, this will lead to a further depreciation of the AUD/USD pair to the levels of 0.6865, 0.6680.

Meanwhile, investors are reacting to negative statistics from Australia by selling the national currency. Thus, the index of business activity in the manufacturing sector was 54.5 points after 55.7 points shown a month earlier, and the indicator in the services sector was 49.6 points, which is worse than the previous value at 50.9 points.

The long-term trend is downward. After reaching the support level of 0.6865, the AUD/USD pair corrected to the level of 0.6990, if it is held, the movement of quotations will continue with the targets at 0.6865, 0.6680.

The medium-term trend changed to a downtrend last week. The key support 0.6936–0.6916 was broken out by the bidders, and now a correction is developing, one of the targets of which may be the 0.7078–0.7058 area. After testing the resistance zone 0.7078–0.7058, it is worth considering new short positions with targets at 0.6736–0.6716.

Resistance levels: 0.6990, 0.7030, 0.7130. | Support levels: 0.6865, 0.6680.

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